Last week, the Interagency Trade Policy Staff Committee chaired by the U.S. Trade Representative (USTR) held its hearing for the 2020 Special 301 Review.
In addition to USTR, the panel had representatives from the U.S. Patent and Trademark Office (USPTO), the U.S. Copyright Office, and the Departments of Commerce , Treasury, Labor, Agriculture, and Health & Human Services.
All of the documents associated with the investigation, including the request for comments, submissions from industries and countries, etc. and hearing statements are available at https://www.regulations.gov/docket?D=USTR-2019-0023. A transcript of the hearing will be posted on the docket within the two weeks. Below are some notes on the hearing.
As usual, the first people to testify were representatives of countries included in previous Special 301 Reports. For the most part, they described actions taken to improve IP protection and enforcement. The questions from the panel were mostly concerned with enforcement of IPRs rather than legislative reforms. The speaker from Korea was an exception – he said that PhRMA had made “errors” in its description of the Korean pricing and reimbursement system. He defended the system as one that recognizes the value of innovation and gives foreign and domestic firms the opportunity to provide input to the pricing and reimbursement decision processes.
The first non-country representative to testify was Roger Murray from the Alliance for Fair Trade with India (AFTI) . He asked to have India placed on the Priority Watch List, and said that the Special 301 process could provide negotiators a roadmap when India and the US meet later to work on a free trade deal. Questions posed involved trade secrets, future engagement with the US, and Section 8 of the patent act, which USPTO called a burden for foreign patent applicants.
Christina Mitropoulos from the American Apparel and Footwear Association focused her testimony on enforcement and trademark issues. The questions she received dealt with particularities of enforcement – USTR and Labor asked her to name countries most responsible for transshipment and the greatest losses, respectively.
Sean Flynn from PIJIP testified next. His own post based on his testimony is here. Flynn noted that South Africa has not been on any Special 301 list since 1999. Nor has any other sub-Saharan African country. Now IIPA is asking USTR to target South Africa for passing legislation – which has not yet become law – that implements multinational IP obligations while expanding limitations and exceptions. The fair use provision in the South African legislation follows the example of US law, and all of the other provisions cited by IIPA exist in other countries. USTR asked how the provision will make it easier for U.S. tech firms to trade with South Africa, and Flynn answered that many technological processes require robust copyright exceptions. The US Copyright Office asked if the South African bill met the fourth factor of the fair use test –whether or not uses affect the market for a work. Flynn said that it does, because US law does, and the South African legislation follows it.
Justin Pine testified for the Biotechnology Innovation Organization, bringing up restrictive patentability standards and weak IP enforcement in his testimony. He also discussed market access barriers, including in developed countries. USTR noted that BIO asked to have Canada, Japan, Malaysia and Korea identified as Priority Foreign Countries in the report, and asked Hine to explain why these countries are more problematic than countries they requested to have listed on the Priority Watch List, such as China and Russia. The answer was that BIO members have higher standards for developed countries, and in the case of Malaysia, they are very worried about the compulsory license.
Leticia Phillips testified for the American Chamber of Commerce in Brazil. She asked to have Brazil taken off the list, noting five improvements in IP last year: reductions in the patent application backlog, a new patent prosecution highway project with the US, joining the Madrid Protocol, increased coordination between enforcement units, and changes to the judicial system. USTR asked her to elaborate on enforcement efforts and Commerce asked for data on enforcement actions.
Joseph Whitlock testified for the Business Software Alliance. He did not focus on individual countries in his testimony, but gave estimates of economic harm caused by the use of unlicensed software and by malware. He warned that non-IP barriers faced by firms in this industry that rely on IP protection are large and growing. Data localization rules, in particular, are a problem for his members, and are a problem for other firms that operate around the globe. USTR noted that the BSA submission identifies countries that use security concerns as trade barriers, and asked how it relates to the protection of IP. Whitlock said that these are companies that rely on IP and are therefore covered by the statute. Treasury noted that BSA’s comments recommend moving Argentina from the PWL to the Watch List, and asked what types of improvement they had seen.
Siyao Liu testified for the China Chamber of International Commerce testified and asked to have China removed from the Priority Watch List. She said that the US government should consider the substantial progress China has made in the area of IP, and listed a recent developments, including numerous new pieces of legislation and strengthened enforcement. She also argued that barriers to market access have been reduced. USTR asked for statistics related to rightholder complaints of IP violations; Commerce asked for more information on enforcement of IP on online platforms.
Shawna Morris testified for the Consortium for Common Food Names, focusing on geographical indications. Matt Priest testified for the Footwear Distributors and Retailers of America, focusing on enforcement against counterfeiting, respectively. USTR asked them both for estimates of damages.
Tom Volente from the Intellectual Property Owners association testified about trade secret protection and compulsory licensing provisions, which he said devalues innovation. Labor asked him to expand on problems with Indonesia’s new compulsory licensing regulation, and USTR asked about the Brazilian health regulator’s role in the review of pharmaceutical patent applications.
Kevin Rosenbaum from the International Intellectual Property Alliance began by reviewing the language of the Special 301 statute, which he said was necessary “given earlier comments.” He argued that the Special 301 review should only be used to seek stronger IP protections ion foreign countries. Rosenbaum also said that all copyright exceptions need to pass the three-step test. The Copyright Office asked whether IIPA’s recommendation that South Africa be put on the Priority Watch List was solely due to the Copyright Amendments Bill. Rosenbaum said that the copyright situation in South Africa is already problematic, but that the Copyright Amendments Bill would make it worse. He said that it contains contractual requirements that would make it “impossible to make content” in South Africa, and that the exceptions do not meet the three-step test.
James Love from Knowledge Ecology International testified that using trade policy to promote ever-higher levels of intellectual property protection will eventually clash with domestic policies aimed at expanding access to medicine in the U.S., especially given the US’s aging population. USTR asked for more specific direction regarding the current Special 301 Review, and Love said that the promotion of strict rules for compulsory licenses could backfire.
Fabiana Jorge testified for MFJ, noting that U.S. consumers would benefit from more competition in the biologics sector, but that efforts to promote competition from biosimilars are undermined by trade policy. USTR and DHHS asked for specific country listing recommendations for the report.
Ryan Ong testified for the National Association of Manufacturers. He had three themes – counterfeiting, trade secret theft, and international groups trying to weaken IP by speaking out in international forums. Commerce asked him for an example of international groups trying to weaken IP through international forums, and he referred to the 2016 UN High Level Panel report on access to medicine.
Chris Moore testified for the Pharmaceutical Research and Manufactures of America. He described the state of compulsory licensing legislation in Malaysia, Chile, Colombia and Saudi Arabia. USTR asked why PhRMA recommended identification of Malaysia, Canada, Japan and South Korea as Priority Foreign Countries. (These are the same countries PhRMA asked to have identified as Priority Foreign Countries.) Moore answered that its members have high expectations for Canada, Japan and South Korea because they are developed countries, and that they thought the Malaysian compulsory license was very serious. State asked for more information on the engagement firms had with the Malaysian government before the compulsory license was issued.
Burcu Kilic testified for Public Citizen. She noted that recent Special 301 Reports have included more about compulsory licensing, and about international efforts to promote the practice. She reminded the panel that compulsory licenses have been part of international patent law for over 100 years, they generally include remuneration to the patent holder, and that the US has issues many compulsory licenses in a variety of technologies. The Copyright Office asked her a question that pertained to Public Citizen’s written testimony – about whether the South African Copyright Amendments Bill would comply with the three-step test. Kilic said that it would, because it is modelled on US law, which is compliant with the three-step test.
Eric Schwartz testified for Sound Exchange, and his testimony focused on the payment of royalties for digital transmissions of recorded music in our trading partners. The Copyright Office asked if he thought USMCA would help in the collection of royalties in Canada, and Schwartz answered that he thought it would.
The Trademark Working Group had an enumerated list of trademark issues which they went through. During Q&A they were asked to identify their highest priority issues in China – and answered these were default judgements and formalities.
The final speaker of the day was Kelly Anderson from the Chamber of Commerce’s Global Intellectual Property Center (GIPC). She said that the USMCA was a missed opportunity to really IP rights, and therefore its IP chapter should not be used as a template for future trade negotiations. USTR noted that the GIPC reports – the IP Index and the Innovation & Creativity Barometer – identify sets of countries that have problematic IP scenarios, but many of these countries were not recommended for listing in the GIPC Special 301 comment. Anderson noted that the 301 listings were more focused on the GIPC members’ concerns.
